OSA Weekly Update - 5/30/2025

1. Message from Auditor Blaha

2. Fire Relief Associations: Pension Bill Signed into Law!

3. Reminder: Fire Relief Association Reporting Deadline

4. Avoiding Pitfall: The "Fraud Triangle"

5. Deadlines

1. Message from Auditor Blaha

The legislature still has a ways to go before completing their budget work, but a number of changes did get done that affect local government. The bill that included changes to reporting and audit requirements for some small entities was signed last Friday by Gov. Walz. Cities, towns, and special districts under 2500 in population and with a combined clerk-treasurer will now not need a full GAAP audit unless their revenues are above a $1 million. Instead, they may only need to complete an Agreed Upon Procedures (AUP) attestation every five years. For municipal liquor stores, that threshold increased to $750,000. That came with withholding some funds from townships that do not complete already required reporting requirements and requiring municipal liquor store audits to be GAAP based. The bottom line is this will save money for small entities and take some pressure off overextended public finance staff. Watch this space and your email for more details about these changes and as always, you can send us your questions directly to state.auditor@osa.state.mn.us.

2. Fire Relief Associations: Pension Bill Signed into Law!

Gov. Walz signed the 2025 Omnibus Pension and Retirement Bill into law on May 23. This bill included all the legislative recommendations of our Fire Relief Association Working Group, including:

  • Changing the March 31 reporting deadline to June 30, so all relief associations have the same reporting deadline to the OSA.
  • Allowing distributions from defined contribution plans as soon as practicable following a firefighter’s separation from service. (Note that firefighters in defined benefit plans must still be at least age 50 to receive a retirement benefit distribution.)
  • Removing authority to deposit member dues or contributions into the special fund and updating municipal contribution calculations accordingly.
  • Updating direct rollover language for consistency with Internal Revenue Code.

The OSA’s Pension Division will be providing additional information in its monthly newsletter about legislative changes affecting relief associations. If you have questions, contact us at pension@osa.state.mn.us.

3. TIF: Documenting Pay-As-You-Go Expenditures

Many TIF districts have pay-as-you-go (PAYG) obligations in which the developer pays up-front costs and is reimbursed with tax increments. Those costs must be substantiated as TIF-eligible costs and documented. For more information, see the TIF Topic: Documenting Pay-As-You-Go Expenditures.

If you have any questions, contact us at TIF@osa.state.mn.us.

4. Avoiding Pitfall: Disaster Recovery Plan

Public entities should adopt a disaster recovery plan to ensure continued governmental operations if faced with a disaster or a major computer breakdown. For example, counties would need to continue with the preparation of payroll, the calculation of tax assessments and settlements, and the recording of receipts and disbursements.

We recommend that a disaster recovery plan include, but not be limited to, the following:

  • A list of key personnel, including the actual recovery team, who should be available during the recovery process;
  • A communication plan;
  • A description of the responsibilities of each member of the recovery team, and of all other entity employees;
  • A plan as to how the entity will continue operations until normal operations are re-established;
  • A list of materials needed to continue operations and how they will be obtained;
  • Identification of the space to be used during the disaster; and
  • A schedule for developing and periodically reviewing and updating the plan.

For additional information on emergency preparedness for mental health and behavior issues that may arise during an emergency see the Minnesota Department of Health website.

More information on disaster planning is available on the Department of Public Safety’s Homeland Security and Emergency Management website.

The full Avoiding Pitfall is available on the OSA website.

5. Deadlines

Due: Performance Measurement Program Report by July 1, 2025

Participation in the Performance Measurement Program by a city or a county is voluntary. Counties and cities that choose to participate in the standard measures program must officially adopt and implement the ten minimum performance measures and system developed by the Council on Local Results and Innovation (Council).

In order to receive the per capita reimbursement, counties and cities must file a report (in a PDF format) with the OSA by July 1, 2025.